Canadians confess lack of understanding of mortgage rules

by Ephraim Vecina on 05 May 2019

Many Canadian consumers have admitted to being unfamiliar of the multiple rules and policies that govern their capability to purchase homes, according to a new TD study.

The poll, which surveyed 1,901 owners and hopeful buyers nationwide, found that an alarming 81% of Canadians professed a lack of understanding on how a potential mortgage rate hike will affect their finances.

Another 42% expressed low confidence in their knowledge of rules like mortgage vacations or payment pauses, while 43% are not confident in their knowledge of the stress tests required by the B-20 regulations implemented last year.

A further 59% said that they don’t fully grasp the impact of the stress testing on their home purchases, the Vancouver Courier reported.

Last week, Bank of Canada governor Stephen Poloz said that despite the latest decision to hold the benchmark figure at 1.75%, interest rates would still need to rise as soon as the various pressures suppressing economic growth ease.

“It is hard to believe that the economy would settle in in a place where it’s growing at potential, and inflation’s on target, and we have unemployment at a 40-year low, and that we’d need a negative real rate of interest in order to sustain that,” the governor told BNN Bloomberg.

“What we need to see is that those headwinds dissipate, and if those headwinds dissipate, then interest rates would rise.”

The bank has earlier estimated the neutral rate to be somewhere between 2.25% and 3.25%.

 

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